Last month, in Part 1 of our coverage of RIA custodian technology we discussed how technology expectations on the part of both advisors and their clients are on the rise, and how custodians are an often overlooked technology resource for RIA firms. This month, we’ll examine how Pershing, Schwab and Raymond James are addressing the technology needs of their advisors.

Pershing

Recently, Pershing’s investment in technology has been tilted more in the direction of the advisory business. According to Patrick Yip, director of advisory market technology strategy at the firm, factors such as the Department of Labor’s proposed fiduciary regulations and the growth in the advisory channel suggest that the advisory channel is where the future growth will be. 

In order to put Pershing’s technology strategy in perspective, it is important to understand who its ideal RIA client is. It is a professionally managed, growth-oriented firm that services high-net-worth and ultra-high-net-worth clients. These firms tend to be midsize to large RIAs with some sophisticated needs. Much of the work undertaken by Pershing in 2015, which will continue into 2016, was being made with this ideal advisor profile in mind.

Perhaps the most interesting initiative, which is already under way, is the merging of the bank custody platform and the brokerage custody platform into a single unit. Yip estimates that 15% of advisory assets are currently custodied on banking platforms, but those assets are not equally distributed across all advisory clients. Typically, the higher a client’s net worth, the more likely that some or all of his assets will be custodied on a banking platform. 

Pershing has already integrated the service model and the business development model of the banking and brokerage businesses so that an RIA firm doing business with Pershing Advisor Solutions (PAS) has a single team that supports both the banking and brokerage businesses. In 2016, the company will be rolling out an integrated technology platform. This will be accomplished by its integrating all of the functionality of the BNY Mellon bank custody platform into the existing PAS platform. 

Upon rollout, advisors will be able to view and manage all of their business through a single unified platform rather than the two they must now deal with. Furthermore, Pershing will extend this functionality to the NetXClient portal so that clients can access the same consolidated view as well as the other functionality that the client portal enables across all accounts. 

Other enhancements to the client portal are in the works. Eventually, these will include access to financial planning applications, account aggregation and secure document sharing.

The allure of a unified system should be obvious. Currently, advisors who have some client assets on each system must deal with two separate interfaces, two different work flows, etc. It is also more difficult than it should be to obtain an aggregated view of all of a client’s assets across the two platforms. For the same reason, clients need to log into two systems for access to their various accounts.

In 2016, advisors will deal with one system and one set of work flows. For example, if an advisor wants to open a new account (for either banking or brokerage), move money or perform any other common task, it will all take place within the same system. Furthermore, Pershing plans to build trust accounting capabilities right into the NetX360 platform so that advisors have the functionality they need to manage trust accounts from within the platform. 

The other big Pershing initiative is the Global Wealth Management platform. As the advisory business becomes increasingly complex, more and more advisors are doing business overseas. The global initiative will bring the functionality of the London and Australia offices into the NetX360 platform. This will include features such as overseas trading, multi-currency capabilities and multi-currency reporting. 

Pershing’s first foray into the digital platform space in conjunction with Marstone is slated for beta in early 2016. According to Yip, advisors have shown significant interest in the Marstone platform. Assuming the beta goes well, a more general rollout could come as early as the second quarter of 2016. Pershing has made it clear that Marstone will not be the only digital platform provider available through Pershing. The company plans on initiating additional relationships soon.

Pershing is also pushing ahead on the mobile front. Like many of its competitors, the company offers native apps for both iOS and Android. Unlike most competitors, it has also created a native mobile app for Windows. 

Finally, Pershing is moving forward with true digital client on-boarding, including e-signature capabilities and the digital funding of accounts, to help advisors better compete with digital platform offerings. 

Schwab

There are three technology themes that the folks at Schwab Advisor Services are focused on right now, according to Neesha Hathi, senior vice president of advisor services technology solutions at Charles Schwab. The first is “the client experience transformed.” According to Hathi, Schwab takes great pride in the quality of the service it has traditionally provided to its advisor clients. The goal of the “client experience transformed” initiative, which is well under way, is to extend that same great client experience to digital channels. As part of that initiative, Schwab plans to release its next-generation Service Center to advisors in the second quarter of this year. The Service Center is where advisors can view images of paperwork and checks, check the status of tasks, view history and submit checks electronically, as well as do many other things. Schwab already offers many of these capabilities, but the goal of the new Service Center is to create a better, more user-friendly experience.

Electronic work flows are also part of this initiative. As of the third quarter of 2015, approximately 25% of forms were being submitted electronically, but Schwab expects that number to increase as the company makes more forms eligible for e-signatures and as it makes usability improvements to electronic work flows in 2016. One impediment to the stronger adoption of e-signatures in 2015 was the resistance of end clients to answering questions (part of the e-signature process). Schwab recently began offering the option of text-based authentication as an alternative, and the initial results are very promising.

Forty percent of advisors had tried eAuthentication by the third quarter of 2015. Seventeen percent had had a wire transfer approved by eAuthentication, usually within 15 minutes. 

A second major focus in the technology area is on infrastructure. Schwab is making numerous online security enhancements. Additionally, it is working on data infrastructure. Based on its estimates of account growth and asset growth in the coming years, the company is investing to make sure its data managing capabilities are sufficient to handle the increased volume of data it expects.

Hathi calls the third area of focus “Beyond Custody.” Here, she is referring to the additional products and services that Schwab makes available to clients such as Schwab Institutional Intelligent Portfolios (SIIP), Portfolio Connect (the company’s next-generation portfolio management/accounting system, scheduled for release in the fourth quarter of 2016) and practice management support. 

In the second quarter of this year, Schwab will roll out enhancements to SIIP. These will allow users to create different sets of portfolios for each office of a multi-office RIA firm. The initiative will also expand the account registration types available through SIIP. Later in the year, Schwab will expand the set of investment products on the platform to include mutual funds. The initial response to SIIP has been impressive. As of the third quarter of 2015, 500 advisory firms had signed up for the program. 

Finally, Schwab is preparing the launch of a cybersecurity initiative, perhaps by the end of the first quarter. According to Hathi, advisors have asked Schwab to help them meet their cybersecurity obligations, and the company is responding. The initiative is expected to include education, tools and other resources to help advisors deal with cybersecurity threats.

Raymond James

At Raymond James, the technology emphasis continues to be on data. “This past year, the client reporting system really came to life,” says Vin Campagnoli, chief information officer at Raymond James. The platform now allows advisors to build custom reporting packages for client meetings and gives them a high degree of control over the data to be presented as well as the presentation of that data. For example, advisors can design their own investment overview pages and save them. Advisors pick the data to be displayed, the layout of the data and even the computation method for performance reporting (time weighted or dollar weighted). Once the package is saved, it can be programmed to run on a regular schedule. So, for example, if a client meeting is scheduled quarterly, the report will run automatically the day before the quarterly meeting is scheduled so it can be reviewed by the advisor beforehand. Report packages can be saved and used for groups of clients, or advisors can customize them down to the individual client level. Customizing reports used to take hours; it can now often be done in minutes.

Previously, Raymond James relied on account aggregation provided through MoneyGuidePro. This worked well for populating financial plans, but it had some limitations, so Raymond James decided it wanted more control over the aggregation of third-party assets. To that end, the company partnered with Fiserv. This will allow for two-way synchronization with MoneyGuidePro, and it will also allow Raymond James to use aggregated data in the advisor workstation and the client portal. 

In the first quarter of this year, Raymond James will begin making third-party data available within reports. This will allow the company to provide a more complete, holistic view of client holdings and allow its advisors to better compete with some of the consumer-facing digital providers. For example, by incorporating third-party data into balance sheet reports and asset allocation reports, advisors will be able to provide clients with a more complete understanding of their financial condition. Access to this data also allows advisors to give better advice.

The firm is also focusing on the usability of its platform. The goal is to make it as interactive as possible while retaining maximum flexibility. “Each of our advisors operates a little bit differently,” says Campagnoli. “We’ve designed our system with so much customization that each advisor can make it their own.” 

This past year, Raymond James built a practice management suite for advisors. It offers an interactive dashboard to help advisors manage their business. It includes all sorts of business analytics at the firm level, the advisor level and even the individual client level. 

There are three new initiatives for 2016: “Opportunities,” client-side enhancements and wealth management. “Opportunities” are data-driven alerts tied to client information. For example, if Raymond James releases a new research report on a security, the new system can alert the advisor to all clients who hold that security and offer the advisor the opportunity to share the report with them. The company will be able to send a list of all maturing bonds to an advisor, or a list of all client accounts that have cash in excess of the investment policy statement on a periodic basis. 

On the client side, Raymond James will give advisors the option to make goal planning and modeling available to clients so that a pre-retiree can view the MoneyGuidePro Play Zone from within the Raymond James client portal and perform some simple what-if scenarios on his or her own or in collaboration with the advisor. The company also plans to build a document storage and collaborative capability into the client portal powered by Box.com. 

The wealth management initiative will create a new, improved proposal system; an interactive product catalog; and a portfolio construction/model management tool.

While each custodian profiled this month has a different set of priorities, it is clear that all of them are investing heavily to support advisors in 2016. These investments should positively impact advisors and their clients in the year ahead.